Housing Inventory Growth VS Housing Crash Predictions

For three years, sensational prognosticators have filled the news with housing predictions pushing fear over real estate market crashes. They still describe home price valuation drops like the Great Financial Crisis. Homes would be worthless they screamed.
Yet, nothing has crashed. In fact, far from a crash. Prices have (mostly) continued to grow. The reality is it seems that housing is merely moderately slowing down a bit, and cooling off.

Chelsey and I reviewed this content in our recent Office Hours that we hold every Thursday.

Let’s look at the data. In a typical year, the avg y/y home appreciation is 5% nationwide. In 2023, that number slowed to 4% and the number of SFR transactions reduced by 5%.
Currently, Interest rates remain about the same, and we are looking at a trend of 2% price growth, and another year of about the same number of transactions as last year.

If anything, the true “crash” already happened under our noses. We all knew it was happening. But unlike the doomsday talking heads, it wasn’t a price crash. It was a transaction crash. This was caused by the rise of interest rates. This graph illustrates the drop in transactions as it relates to rates.

Three years of high interest rates and three years of rising home prices have made affordability difficult. However, inventory has also been growing in that time frame. Today’s housing inventory growth is 20% increase over last year.

Now Mike at Altos predicts 2026 will see a return to “normal” inventory. Think way back to 2018 level of inventory. Normal seems nice. Normal is predictable. Normal will reduce listing price, and help increase transaction volume to help out those that remain committed to helping home owners.

MLS SFR list prices have dropped recently (for short periods of time) when interest rates have spiked. Inventory has slowly gained ground over 3 years. This is unlike the spike in 2008 when inventory exploded over night 4x to what it is today. At the peak of the Great Financial Crisis (GFC), U.S. housing inventory for sale reached approximately 4 million homes. This peak occurred around 2007-2008, as the housing market faced a significant downturn due to widespread mortgage defaults and foreclosures. Currently we have fewer than 1.2 million homes for sale, and consumers have loads of equity – unlike in 2006 leading up to the GFC.

What’s your Housing Inventory Growth Predictions? Will home prices stay, slip or dip backwards as inventory increases in 2025? What do you think?